Yes, it is possible to make money with Amazon stock (AMZN), much like with any publicly traded stock. Amazon has long been one of the most successful and widely traded companies on the stock market, and its stock offers several ways to generate income or grow wealth over time. 

Key Ways To Make Money with Amazon Stock

Here are the primary ways to make money with Amazon stock:

1. Capital Appreciation (Price Increases)

One of the most straightforward ways to make money with Amazon stock is through capital appreciation, which occurs when the stock price increases over time. Investors who buy Amazon shares at a lower price and sell them later at a higher price realize a profit from the difference between their purchase price and the sale price.

• How It Works: Amazon’s stock price tends to fluctuate based on company performance, market conditions, and broader economic trends. Over the years, Amazon has consistently delivered strong financial results, leading to significant price increases. For example, if you had bought Amazon stock when it first went public in 1997, you would have paid around $18 per share (adjusted for stock splits). As of 2024, Amazon’s stock price is in the thousands, so long-term investors have seen tremendous growth in their investments.
• Example: If you purchased $10,000 worth of Amazon stock five years ago and the stock doubled in value during that time, your investment would now be worth $20,000, allowing you to sell for a $10,000 profit.
• Expected Income: The amount of money you can make depends on how much the stock appreciates and how long you hold it. Historically, Amazon has delivered strong returns, with average annual returns ranging from 20% to 30% over long periods, but stock prices can fluctuate, and there are risks involved.

2. Trading Amazon Stock

Active traders can make money from short-term fluctuations in Amazon’s stock price. This strategy, known as stock trading, involves buying and selling Amazon shares on a short-term basis, aiming to profit from price movements over days, weeks, or months.

• Day Trading: This involves buying and selling Amazon stock within a single day. Day traders use technical analysis and market trends to predict price movements and profit from small, short-term price changes. It requires a lot of attention, skill, and experience, but it can yield high profits for successful traders.
• Swing Trading: Swing traders aim to profit from price swings that occur over several days or weeks. They typically hold Amazon stock for a short period and sell when they believe the stock has reached a peak, aiming to buy again when the price drops.
• Expected Income: The income from trading Amazon stock can vary widely based on skill, market conditions, and how much risk you’re willing to take. Skilled traders can potentially make thousands of dollars in a short period, but trading is risky and can also lead to significant losses if the market moves against you.

3. Options Trading on Amazon Stock

Options trading is another way to make money from Amazon stock, involving financial derivatives that give you the right (but not the obligation) to buy or sell shares at a specific price on or before a certain date. You can either trade call options (the right to buy stock) or put options (the right to sell stock).

• Call Options: If you expect Amazon’s stock price to rise, you can buy a call option, which allows you to purchase Amazon stock at a predetermined price. If the stock price increases above the strike price, you can exercise the option or sell it for a profit.
• Put Options: If you expect the stock to decrease in value, you can buy a put option, which allows you to sell Amazon stock at a specific price. If the stock price falls below the strike price, you can sell the option for a profit.
• Expected Income: Options trading can lead to large profits, especially when the stock price moves significantly in the expected direction. However, options are highly speculative and risky, with the potential for large losses if the market doesn’t move as anticipated. Traders may see returns ranging from a few hundred dollars to tens of thousands, depending on the size of their positions and market movements.

4. Dividend Investing (Not Available with Amazon)

Amazon does not currently pay dividends to its shareholders. Dividends are regular cash payments that some companies distribute to their investors as a share of profits. Many investors rely on dividends for steady, passive income. However, Amazon reinvests its profits into the business to drive growth, rather than distributing cash to shareholders. So, while dividend income is not an option with Amazon stock, the company’s growth-focused strategy has historically led to strong capital appreciation.

5. Long-Term Wealth Building

Many investors choose to hold Amazon stock as part of a long-term investment strategy. Over time, Amazon has proven to be a highly valuable investment, as it has grown from a small online bookstore into one of the largest and most diversified companies in the world. Investors who buy and hold Amazon stock over the long term are betting on the company’s continued growth and expansion into new markets.

• How It Works: By holding Amazon stock for years or even decades, you benefit from compound growth as the company grows its revenue and profits. Over time, the stock’s value increases, and you can choose to sell the stock when you need the funds or when it reaches your target price.
• Expected Income: Historically, long-term investors in Amazon stock have seen significant returns. For example, if you had invested $1,000 in Amazon stock in 2010, it could have grown to over $20,000 or more by 2024, based on historical growth rates. Long-term returns of 15% to 30% per year have been common with Amazon, although future returns will depend on the company’s continued success.

6. Fractional Shares Investing

For those who can’t afford to buy a full share of Amazon stock (which can be quite expensive), some brokerage platforms offer the ability to buy fractional shares. This allows you to invest smaller amounts of money into Amazon stock, which can still appreciate in value over time.

• How It Works: With fractional shares, you can invest as little as $5 or $10 in Amazon stock, and your return will be proportional to the amount you invested. This makes Amazon stock more accessible to small investors, who can still benefit from the stock’s long-term growth.
• Expected Income: While the absolute income will be smaller, fractional shares can still deliver the same percentage returns as full shares. For example, if Amazon stock grows by 10% in a year, and you invested $100, your investment would grow to $110.

Risks to Consider

While Amazon has been a highly successful stock, it’s important to remember that investing in the stock market always involves risk. Stock prices can fluctuate due to various factors, including economic conditions, competition, and changes in the company’s performance. Before investing, it’s essential to consider your risk tolerance and financial goals.

Making money with Amazon stock is possible through several methods, including capital appreciation, short-term trading, options trading, and long-term investing. While Amazon does not pay dividends, its stock has been a strong performer for long-term investors. Potential earnings vary based on strategy and timing, with returns ranging from modest gains for small-scale investors to significant profits for those who buy and hold over time or engage in active trading. Like all investments, there are risks involved, so it’s important to do thorough research and consider your risk tolerance before buying Amazon stock.